ESSAYS ON HUMAN CAPITAL INVESTMENT AND LABOR MARKETS

Abstract

These essays concern human capital investment and the role of labor markets in both the production of human capital and the marketing of human capital. Chapter 1 studies the effects of school finance legislation on the outcomes of public school students in the United States. Reforms to state school finance systems have led to substantially higher spending in schools, but existing evidence suggests that schools do not hire more or better teachers, despite raising teacher salaries. I confirm with new data on achievement that school quality does not improve, in terms of how quickly students learn. However, I contribute new evidence that schools extend the school year, taking advantage of excess labor supply during the summer vacation to give students more time to learn, but imposing previously un-measured opportunity costs on students and their families. Chapter 2 studies a puzzle in the literature on employer learning and wage setting. It has been argued that employers are poorly informed about the cognitive skills of their workers, so that the most skilled workers have a strong incentive to reveal information to reap higher wages. The puzzle is why cognitive testing isn’t in greater use. My coauthor Maria Zumbuehl and I show that entry-level employers already have access to highly predictive, publicly observed proxies of the relevant cognitive skills, making testing redundant. Chapter 3 studies self-commitment among high school students as a means of motivating effort toward investments in human capital. My coauthor Ana Carolina Brito and I show that observed commitment behavior in two field experiments is far from the optimal behavior in a standard model of self-commitment with time-inconsistent preferences.